Guess What: It's The Settlements!

Cyril Monnet and Thorsten Koeppl

No 1051, Working Paper from Economics Department, Queen's University

Abstract: Exchanges and other trading platforms are often vertically integrated to carry out trading and settlement as oneoperation. We show that these vertical silos can prevent the full realization of efficincy gains from horizontal consolidation of trading and settlement platforms. Independent of the gains fromsuch consolidation, when costs of settlement are private information, a merger of vertical silos cannot be designed to always ensure efficient trading and settlement after the merger.Furthermore, we show that efficiency can nevertheless be guaranteed either by delegating the operation of settlementplatforms to agents or by forcing competition across vertical silos through cross-listings.

Keywords: Clearing and Settlement; Cross-listing; Vertical and Horizontal Integration; Mechanism Design (search for similar items in EconPapers)
JEL-codes: C73 G20 G34 L22 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-08
New Economics Papers: this item is included in nep-bec, nep-com, nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1051.pdf First version 2005 (application/pdf)

Related works:
Working Paper: Guess what: it's the settlements! (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1051

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